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Beware of loss of control in an estate plan

Creating an estate plan can be an overwhelming and emotional journey. For some, outlining the division of assets or funds can pose unique complications. Anyone in Michigan who is involved in creating an estate plan may want to carefully consider his or her options before relinquishing control of any aspect of his or her life.

Many people decide to sign over a house or property to an heir early on in the estate planning process. This is often seen as a way to avoid dealing with the tax implications of leaving the property to heirs through a will or having a home tied up in the time-consuming process that is probate. However, signing over a home while still living in it, and while still in possession of the ability to make important decisions, can backfire, leaving a perfectly competent person without the legal right to make decisions that directly impact his or her life.

Avoid making estate plan mistakes through proper planning

When it comes to life lessons, there are a few lessons to be learned from the lives of certain celebrities. There are also lessons about what not to do based on mistakes exhibited in the estate plans of the rich and famous. While each and every estate plan is unique, as unique as the Michigan family involved, there are easy ways to avoid making mistakes that are similar to some brought to light by the passing of celebrities.

The recent passing of Robin Williams exposed a mistake in how he prepared for his passing and kept up with his estate planning responsibilities. The Hollywood star created trusts to provide for his children's futures, which is a recommended way to leave money behind that allows the amounts and terms to remain private. However, one of the trustees he named was deceased, which meant a court petition needed to be filed by the surviving trustee, resulting in the details of the trust being made public.

Proactive tips for an estate plan in Michigan

Creating an estate plan typically involves drafting, signing and filing a few key documents. While this is an important part of the process, there are other recommended steps for creating an estate plan. Michigan families may be interested in the following tips and ideas, if they are in the midst of the process of simply beginning to think about creating an estate plan.

An estate plan determines the fate of funds that go far beyond what is in the bank. Everything from life insurance policies and 401(k) plans are at stake. It is vital to designate proper beneficiaries for each. If a person discovers that a beneficiary is listed who is no longer preferred, that person should act to change the beneficiary sooner rather than later. Keeping careful records and letting family members know who beneficiaries are is also recommended.

Estate planning can include what kind of legacy to leave behind

Estate planning often revolves around who will get an inheritance and who won't. The question of how much money and what assets to leave to whom is an essential part of the estate planning process for Michigan families. However, families have recently begun to think about what else they leave behind for the next generation, namely what their legacy will be.

Many people who set out to create an estate plan find it difficult to justify simply leaving money. For some, it is a question of whether leaving bulk funds to a person is a benefit for them in the long run or possibly detrimental. For example, leaving a recovering or active addict a large sum of money may not be wise and may not help a person preserve the family's legacy.

An estate plan for single parents should be done early

There are many challenges that come with being a single parent. A single parent may find him or herself in a situation where he or she is solely shouldering the burden of ensuring a stable financial future for his or her children. Michigan single parents may want to stop and think about how crafting a comprehensive estate plan is one very vital move that should be made sooner rather than later.

An estate plan can be the best way for a single parent to protect his or her assets and his or her children's futures. If there are minor children to consider, not having an estate plan that clearly states who will be guardian of those children can lead to a potentially disastrous situation. Funds and benefits also need to be allocated for the care of those minor children. Without an estate plan, the state, or possibly an ex-spouse, may be in charge of those assets and very important decisions.

Tips to not let an estate plan go horribly wrong

When the time comes for a family, couple or an individual to set up an estate plan, that party or parties may have very clear ideas about what they want to happen or what they foresee the situation to be. Nevertheless, most Michigan families realize life circumstances and family changes can and do happen throughout one's lifetime. Anyone who has already or is in the process of creating an estate plan may want to think about what can go wrong after that plan has been created.

One thing many get wrong is that they create a plan and then simply leave it as it is. In a typical estate plan, people designate guardians for minor children and also decide how much to put into a trust for beneficiaries. The person designated as a guardian might be a great choice at the time and then become the wrong choice after certain events or lifestyle changes transpire. It is important to keep these vital people in mind and act accordingly when they no longer fit the bill.

Without knowledge of an estate, an estate plan can be complicated

People may know they need an estate plan, but that can mean different things to different people. Anyone in Michigan who attempts to create an estate plan will need to understand what their estate actually entails. It is then important to understand what one's wishes are and how to make that happen efficiently and cost-effectively.

A person must first and foremost understand what their estate includes. A good place to start is to outline a person's net worth. It can be very difficult to divvy up wealth without understanding what kind of assets actually exist. Net worth is determined by taking the worth of assets and subtracting any liabilities, which is all debts. Appraisals of assets may be necessary to conduct this important step.

Potential pitfalls of not making an estate plan

No one likes to think about needing an estate plan. An estate plan essentially forces a person or family to think about their mortality or the mortality of a loved one. However, not planning accordingly or not being prepared can be costly to loved ones and can also leave more work and cost more money for those who have to deal with the aftermath of an ill-prepared or incomplete estate plan. Anyone in Michigan who has not thought outside of the box when it comes to an estate plan may benefit by stopping and doing so.

A lot of people do decide to create a will and outline the basics of who gets what. Yet, many of those people may not take any time to revisit that estate plan. Beneficiaries can be blindsided or shocked to see that a plan that might have been relevant 20 years earlier only leads to family strife because it was never updated. People divorce, more children are born and children and parents sometimes develop strained or complicated relationships. Not updating a plan to accommodate these changes can be devastating and unfair to those left behind.

Creating an estate plan isn't just for the elderly

When people think about estate planning, they may automatically assume it is a concern for those who are of a certain age and lot in life. However, there is never an age that is too young to think about an estate plan and ensure that the process is handled correctly. Anyone, especially those in their 30s in Michigan, who owns a home, has a family or has any kind of assets should act to protect themselves and their loved ones.

There are certain documents the 30-something generation should create as soon as possible. One is a will. A will is necessary to protect assets and can outline who will administer an estate. More importantly, a will can also outline who will act as a guardian to minor children.

Michigan residents may want to consider a trust fund

Michigan residents who are looking to begin the estate-planning process may be a bit overwhelmed by the different documents that they may be able to set up. Many individuals are aware of how a will works and may believe that this document is the most important one. While individuals should not rule out making a will, they may also want to consider other documents and accounts as well, such as a trust.

Trusts and wills have similar purposes, in that they disclose what should happen with certain assets after a person's passing. However, a trust does not have to follow the same legal processes that a will does when it comes to distributing the assets. Parties named in a trust may be able to more quickly receive what they have been bequeathed due to the process not having to be court supervised.

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